SERGS PRODUCTS, INC., and SERGIO T. GOQUIOLAY, petitioners, vs.

PCI LEASING AND

FINANCE, INC., respondent. [G.R. No. 137705. August 22, 2000]
Summary: Petition for Review on Certiorari assailing the Decision of the Court of Appeals (CA) affirming the
RTCs decision and its Resolution denying reconsideration. Regional Trial Court (RTC) of Quezon
City issued a Writ of Seizure and denied petitioners Motion for Special Protective Order, praying that the
deputy sheriff be enjoined from seizing immobilized or other real properties in (petitioners) factory in
Cainta, Rizal and to return to their original place whatever immobilized machineries or equipments he may
have removed.
FACTS: PCI Leasing and Finance, Inc. (PCI) filed with the RTC-QC a complaint for sum of money with an
application for a writ of replevin. Respondent judge issued a writ of replevin directing its sheriff to seize and
deliver the machineries and equipment to PCI Leasing after 5 days and upon the payment of the necessary
expenses. In implementation of said writ, the sheriff proceeded to petitioners factory, seized one machinery
with word that he return for the other machineries. Petitioners filed a motion for special protective order,
praying for a directive for the sheriff to defer enforcement of the writ of replevin. PCI Leasing opposed on
the ground that the properties were personal and therefore still subject to seizure and a writ of replevin. In
their Reply, petitioners asserted that the properties sought to be seized were immovable as defined in
Article 415 of the Civil Code, the parties agreement to the contrary notwithstanding. The sheriff again
sought to enforce the writ of seizure and take possession of the remaining properties and he was able to
take two more machineries. The parties appealed. The appellate court, citing the Agreement of the parties,
held that the subject machines were personal property, and that they had only been leased, not owned, by
petitioners; and ruled that the words of the contract are clear and leave no doubt upon the true intention of
the contracting parties.
ISSUE: WOR the said machineries are personal, not immovable and may be the subject of replevin.
HELD: The SC ruled that the machines are personal property and therefore can be the subject of replevin.
Pursuant to Rule 60 sec. 3 of the Rules of Court only personal properties may be the subject of replevin.
However, petitioners contend that the subject machines used in their factory were not proper subjects of
the Writ issued by the RTC, because they were in fact real property. Under Art. 415 par. 5 of the Civil code:
machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry
or works which may be carried on in a building or on a piece of land, and which tend directly to meet the
needs of the said industry or works, are immovable properties. In the present case, the machines that were
the subjects of the Writ of Seizure were placed by petitioners in the factory built on their own land and were
essential and principal elements of their chocolate-making industry. Hence, although each of them was
movable or personal property on its own, all of them have become immobilized by destination because
they are essential and principal elements in the industry. However, the Court has held that contracting
parties may validly stipulate that a real property be considered as personal. After agreeing to such
stipulation, they are consequently estopped from claiming otherwise. Under the principle of estoppel, a
party to a contract is ordinarily precluded from denying the truth of any material fact found therein.
In the case, the Lease Agreement clearly provides that the machines in question are to be considered as
personal property. Specifically, Section 12.1 of the Agreement states: The PROPERTY is, and shall at all
times be and remain, personal property notwithstanding that the PROPERTY or any part thereof may now
be, or hereafter become, in any manner affixed or attached to or embedded in, or permanently resting
upon, real property or any building thereon, or attached in any manner to what is permanent. Clearly then,
petitioners are estopped from denying the characterization of the subject machines as personal
property. Under the circumstances, they are proper subjects of the Writ of Seizure.